Accredited investors have access to a broader investment universe than the public, including private markets that are not available through public exchanges. These opportunities—ranging from private equity and private credit to real assets and structured investments—can play an important role in building diversified, resilient portfolios. While private investing offers compelling long-term potential, it also requires a thoughtful, disciplined approach to risk, liquidity, and due diligence.

This guide outlines how private investing works, why it can be attractive for accredited investors, and what considerations are essential before allocating capital.

What Is Private Investing?

Private investing refers to allocating capital into businesses, assets, or lending structures that are not publicly traded. Unlike public stocks or bonds, private investments are not priced daily and are typically held for longer periods. This structural difference allows investors to focus on underlying performance rather than short-term market fluctuations.

Because private investments are not accessible through traditional exchanges, participation is generally limited to accredited investors who meet specific income or net worth thresholds. These requirements are designed to ensure investors have the financial capacity and sophistication to understand and absorb the risks involved.

Why Accredited Investors Consider Private Markets

One of the primary reasons accredited investors allocate to private markets is diversification. Private investments often behave differently than public equities and bonds, which can reduce overall portfolio volatility and dependence on public market cycles.

Key benefits of private investing include:

• Portfolio diversification across asset classes and strategies
• Reduced correlation to public markets and daily price movements
• Long-term return potential driven by operational improvements and strategic growth
• Access to exclusive opportunities unavailable through public exchanges

By expanding beyond traditional assets, accredited investors can build portfolios that are better positioned to navigate market uncertainty.

The Importance of a Disciplined Approach

While the benefits of private investing are compelling, success depends on discipline and careful evaluation. Private investments typically involve longer holding periods and limited liquidity, meaning capital may be locked up for several years. Investors must be comfortable with these time horizons and align allocations with their broader financial plans.

Risk assessment is equally critical. Private investments can carry business, operational, and market risks that differ from those in public securities. Understanding how these risks are mitigated—and how they could impact outcomes—is a core part of responsible private investing.

Important factors for investors to evaluate include:

• Liquidity constraints: Ability to commit capital for extended periods
• Risk profile: Downside protection, capital structure, and loss potential
• Return drivers: How value is created over time
• Alignment of interests: Incentives between investors and managers

A disciplined framework helps investors avoid overexposure and ensures private investments complement, rather than dominate, a portfolio.

The Role of Due Diligence

Due diligence is central to protecting capital in private markets. Unlike public companies, private investments are not subject to the same level of disclosure or regulatory oversight. This makes independent analysis and manager evaluation especially important.

Effective due diligence involves assessing the investment strategy, track record, governance structure, and risk controls of both the opportunity and the firm managing it. Investors should also understand how returns are generated and what assumptions underpin projected outcomes.

Key due diligence considerations include:

• Manager experience and track record across market cycles
• Investment process and underwriting standards
• Risk management practices and downside protections
• Transparency and reporting throughout the investment lifecycle

Thorough due diligence does not eliminate risk, but it significantly improves the odds of achieving favorable long-term outcomes.

How Private Investment Firms Add Value

For many accredited investors, partnering with a private investment firm provides structured access to opportunities that would otherwise be difficult to source or manage independently. These firms offer professional oversight, institutional-grade underwriting, and active portfolio management.

Private investment firms typically manage the entire lifecycle of an investment, from sourcing and structuring to monitoring and exit. Their expertise helps mitigate risks, identify value creation opportunities, and navigate complex market conditions.

The advantages of working with a private investment firm include:

• Access to curated opportunities and proprietary deal flow
• Professional risk assessment and monitoring
• Active management and governance
• Operational and strategic expertise to enhance value

This partnership approach allows accredited investors to benefit from private markets without bearing the full burden of execution and oversight.

Integrating Private Investments Into a Portfolio

Private investing should be viewed as a component of a broader portfolio, not a standalone solution. Allocation sizes should reflect an investor’s risk tolerance, liquidity needs, and long-term objectives. Many investors choose to gradually build exposure over time, allowing for diversification across strategies and vintages.

Because private investments are long-term by nature, patience is essential. Value creation often occurs over years through operational improvements, strategic growth initiatives, or disciplined capital management. Investors who approach private markets with realistic expectations and a long-term mindset are best positioned to benefit.

Conclusion

Private investing offers accredited investors access to a powerful set of tools for diversification and long-term growth. By moving beyond public markets, investors can reduce correlation, pursue differentiated return drivers, and build more resilient portfolios. However, success requires discipline, thorough due diligence, and an understanding of liquidity and risk.

Partnering with a reputable private investment firm can provide the structure, expertise, and oversight needed to navigate private markets effectively. For accredited investors seeking long-term value creation, private investing can be a meaningful and strategic addition to a well-balanced portfolio.

Speak with a private investment partner.